1. The Ship Mortgage Act, Subsections P and S, gives a maritime
lien on any vessel, whether foreign or domestic, for necessaries
furnished on the order of the owner or his authorized agent, and
relieves the libellant from the necessity of alleging or proving
that credit was given to the vessel, but no other change in the
general principles of the exiting law of maritime liens was
intended. Pp.
279 U. S.
567-568.
2. The lien may be waived by agreement or otherwise, and no
express renunciation of the lien is essential. P.
279 U. S.
568.
3. Coal was sold to the owner of a vessel under contracts
providing that payment should be made on delivery by trade
acceptances endorsed by designated persons who, in consideration of
the contracts, agreed to make such endorsements. Neither contract
referred to any lien on the vessel, and each recited that the
entire contract was as therein stated, and that there was no
outside condition, warranty, or understanding. Upon delivery of the
coal, the libellant accepted the endorsed acceptances (one of which
was later paid), and when it filed the libel against the vessel, it
still retained the unpaid acceptance, and afterwards brought suit
upon it against the endorsers.
Held that the right to a
lien was waived. P.
279 U. S.
572.
25 F.2d 48, affirming 22 F.2d 584, affirmed.
Certiorari to the circuit court of appeals to review a decision
affirming a decree of the district court which denied petitioner's
claim to a maritime lien for an unpaid balance of the purchase
price of bunker coal furnished by it on the request of the owner to
and for the use of the steamship.
Page 279 U. S. 565
MR. JUSTICE SANFORD delivered the opinion of the Court.
In May, 1925, W. A. Marshall & Co., Inc., filed a libel in
admiralty in the federal district court for Southern New York
against the Steamship
President Arthur, asserting a
maritime lien thereon for an unpaid balance of the purchase price
of bunker coal furnished by it on the request of the owner to and
for the use of the steamship. The owner, the American Palestine
Line, Inc., answered as claimant, denying that the Company had a
lien on the steamship and alleging that the entire purchase price
had been paid in accordance with the contract of sale.
At the hearing, the district court held, on the evidence, that
the Company had no lien on the vessel, and dismissed the libel. 22
F.2d 584. This decree was affirmed by the circuit court of appeals.
25 F.2d 648.
The evidence, which is undisputed, shows that, when the
negotiations were entered into for the coal, the Line wished to pay
for it on longer terms than were usually granted, and that the
Company, after investigating the standing of the Line, not
believing that it was financially responsible, and wanting
additional security, required the Line to give trade acceptances
endorsed by responsible and acceptable persons, with the purpose
that, if needed at any time, the money could be obtained by
discounting the acceptances, thus endorsed, prior to their
maturity.
Thereupon, in February and March, 1925, the parties entered into
two written contracts for the coal. Each of these provided that the
Company should sell and the Line, as owner of the steamship, should
buy at a specified price, a designated amount of coal "to be used
as bunker coal for" the steamship and to be delivered on specified
dates. Each provided that the Line should "pay for the said coal as
follows: by delivering" to the Company two trade acceptances, dated
the date of the delivery of
Page 279 U. S. 566
the coal, due March 10 and May 8, respectively, and "endorsed by
Jacob Wacht, Jacob S. Strahl and Joseph W. Gottlieb." Neither
contract referred to any lien on the vessel, and each recited that
"The entire contract between the parties is stated above, and there
is no outside condition, warranty, agreement, or understanding." At
the foot of each contract, the persons named as endorsers also
signed an agreement reciting that, "[i]n consideration of the
execution of the foregoing contract" and the delivery of the coal
to the Line and of one dollar, they jointly and severally agreed to
endorse the trade acceptances described in the contract.
Without the consideration of such endorsements, it was shown,
the Company would not have sold the Line the coal.
The coal called for by the contracts was delivered to the
steamship. The purchase price amounted to $21,736.16. For this, the
Line gave the Company its two trade acceptances endorsed by the
three designated persons, these being consolidations of the four
acceptances required by the two contracts. The acceptance for
$11,794.54, first maturing, was duly paid. The acceptance for
$9,382.62, maturing later, was not paid, and was protested. This
was the amount of the balance for which the Company claimed a
lien.
After filing the libel, the Company also brought a civil action
upon the unpaid acceptance in a state court, against the endorsers
only. This is still pending and undetermined.
The questions presented here are: whether, under the contracts,
the Company waived the maritime lien which it would otherwise have
had on the steamship to secure the payment of the purchase price,
and, if not, whether the delivery of the endorsed acceptances
constituted under the contracts payments of the purchase price
which extinguished the lien.
Page 279 U. S. 567
1. As to the first of these questions, it is necessary to
consider the provisions of the Maritime Lien Act of 1910, [
Footnote 1] relating to liens for
necessaries, which were reenacted in the Ship Mortgage Act of 1920.
[
Footnote 2] Subsec. P of the
latter Act provides that:
"Any person furnishing repairs, supplies . . . or other
necessaries to any vessel, whether foreign or domestic, upon the
order of the owner of such vessel, or of a person authorized by the
owner, shall have a maritime lien on the vessel which may be
enforced by suit
in rem, and it shall not be necessary to
allege or prove that credit was given to the vessel."
Subsec. S provides that:
"Nothing in this section shall be construed to prevent the
furnisher of repairs, supplies, . . . or other necessaries, . . .
from waiving his right to a lien, . . . at any time, by agreement
or otherwise. . . . [
Footnote
3]"
Prior to the Act of 1910, it had been settled that, by the
maritime law as administered in this country, a lien was given for
necessaries furnished a vessel in a port of a foreign country or
state upon the credit of such vessel, but that no such lien was
given for necessaries furnished in the home port or state.
The
Roanoke, 189 U. S. 185,
189 U. S.
193.
The purpose of the Act of 1910, as shown by the Reports of the
Committees of Congress, was to do away with this "artificial
distinction" and
"the doctrine that, when the owner of a vessel contracts in
person for necessaries or is present in the port when they are
ordered, it is presumed that the materialman did not intend to rely
upon the credit of the vessel, and that hence, no lien arises;"
and "to substitute a single federal statute for the state
statutes insofar as they confer liens for repairs, supplies, and
other necessaries."
Piedmont & George's Creek Coal Co. v.
Seaboard Fisheries Co., 254 U. S. 1,
254 U. S. 11.
Page 279 U. S. 568
To this end, the Act gave a maritime lien on any vessel, whether
foreign or domestic, for necessaries furnished on the order of the
owner or his authorized agent, and relieved the libellant from the
necessity of alleging or proving that credit was given to the
vessel. The Committee reports show, however, that it was not
intended to make any other change in the general principles of the
existing law of maritime liens,
Piedmont Coal Co. v. Seaboard
Fisheries Co., supra, p.
254 U. S. 11, and
the specific provision that the Act should not be construed as
preventing the furnisher of the necessaries from waiving his right
to a lien, "by agreement or otherwise," indicates clearly, we
think, that it was not intended to change the principles of the
maritime law in respect thereto. That an express renunciation of
the lien is not essential is plain.
We need not enter here into the general field of the waiver of
maritime liens. Such liens differ in their character, and are not
equally favored -- the lien for necessaries, which is a secret one,
being
stricti juris, Piedmont Coal Co. v. Seaboard Fisheries
Co., supra, 254 U. S. 12. It
suffices to say that we think the principles applicable to the
question whether the lien was waived by the contracts entered into
here are aptly indicated in the following cases, which, in the
main, were analogous in their facts to the present case, and were
decided by members of this Court sitting at circuit.
In
Murray v. Lazarus, 1 Paine, 572, 17 Fed.Cas. 1049,
1051 (1826), the libellants made a special agreement with the
master for the payment of their advances for repairs and supplies
furnished the vessel in a foreign port, and took from him a bill of
exchange drawn upon the agents of the owner. Thompson, Circuit
Justice, in holding that the libellants had no lien for these
advances on the freight monies received by the owners, said:
"When an express contract has been entered into for the payment
of such
Page 279 U. S. 569
expenses, that must be resorted to, and will be considered a
waiver of such implied lien if any existed. And a party who has
waived his right in this respect cannot be permitted, at a
subsequent time and under a change of circumstances, to reinstate
himself in his former condition to the injury of others. . . . If
this is to be considered a regular and ordinary bill of exchange,
it was a substitution for any lien that might have existed, and
must be considered a relinquishment thereof."
In
Phelps v. The Camilla, Taney, 400, 19 Fed.Cas. 441,
445 (1838), the libellants furnished the agents of the vessel in a
foreign port copper which was used in repairing the vessel. The
sale was made on a written order of the agents that made no mention
of the vessel or her owners. The copper was charged to the agents,
and they gave the libellants their negotiable note, which was not
paid. The libellants claimed that the charge to the agents had been
made by mistake, and some months later changed the account on their
books and charged the copper to the ship and her owners. Taney,
Circuit Justice, finding upon the evidence that the copper was sold
to the agents upon their personal credit and was not furnished upon
the credit of the brig and her owners, held that the libellants had
no lien, but added;
"It must not, however, be understood that the decision would be
different if the copper had been originally charged to
The
Camilla and her owners. It is true that, upon such a sale, the
libellants would in the first instance have acquired a lien upon
the brig; but that lien, in my opinion, would have been waived by
taking afterwards the note of [the agents]. . . . If the party does
not choose to rely on the contract which the maritime law implies
in such cases, but takes an express written contract, he must rely
on the contract he makes for himself, and cannot, upon a change of
circumstances, resort to the securities upon which, in the absence
of any special
Page 279 U. S. 570
agreement, the law presumes that he relied, and if he takes a
note or bill of exchange, or any other personal engagement, for the
payment of the debt, he is presumed to rely on this personal
security, and to waive his lien, unless he stipulates that the
liability of the vessel shall still continue."
In
Leland v. Medora, 2 Woodb. & M. 92, 15 Fed.Cas.
298, 299 (1846), Woodbury, Circuit Justice, speaking of the lien
for repairs on a vessel, said that,
"if the evidence . . . shows that the ship was not relied on
originally, though foreign, but the master or owners or other
security were, the lien does not attach anywhere or under any form.
The Maitland, 2 Hagg.Adm. 253;
The Nestor, 1
Sumner (U.S.C.C.) 73."
In
The Ann C. Pratt, 1 Curt. 340, 1 Fed.Cas. 947, 950
(1853), Curtis, Circuit Justice, in holding that there was no
maritime lien for advances to the master of the vessel in a foreign
port to make necessary repairs that had been secured by a void
bottomry bond, said, citing
The Nestor and other
cases,
"that the lien created by the maritime law may be, and is,
waived by the creditor by any act or contract which is inconsistent
with an intention to receive or retain that lien."
The decree in this case was affirmed in
Carrington
v. The Ann C. Pratt, 18 How. 63,
59 U. S. 68, in
which this Court said that
"it is well settled that the lien implied by the general
admiralty law may be waived by the express contract of the parties,
or by necessary implication, and the implication arises in all
cases where the express contract is inconsistent with an intention
to rely upon the lien. A familiar instance is where the money is
advanced or repairs made, looking solely to the personal
responsibility of the owner or master."
In
Taylor v. Commonwealth, 23 Fed.Cas. 756, 757 (1875),
the libellant, before making repairs on the vessel
Page 279 U. S. 571
at her home port, had entered into a written contract specifying
that they were to be paid for partly in cash and partly in endorsed
notes -- that is, negotiable notes, with personal security. Miller,
Circuit Justice, in holding that, under these circumstances, there
was no lien on the vessel for the repairs, said:
"I have no doubt of the fact that a man doing that kind of work
may rely on the owner of the vessel, and that, if he makes no
specific contract on the subject, he will have a right against the
owner and the vessel, . . . but that is a lien which the law
implies from the circumstances, and if a specific contract is made
which shows that the party relied upon other security and other
modes of payment, then he cannot enforce the admiralty lien. It is
very clear to me, here, that [the libellant], in making this
contract, never intended to rely on the security of the vessel
itself, because he made this contract for the very best kind of
other payment. . . . I think, having made an express contract for
an express security, he cannot say, 'I did this work on the credit
of the vessel.' In other words, I think if there is any question of
admiralty lien, . . . that it must have been the intention in the
mind of the party who furnishes the supplies and repairs whether,
in a home or foreign port, to rely on the credit of the vessel. . .
. If it can be shown that he did not rely on that alone, and that
he intended to rely on other security which he supposed sufficient,
or which was supposed to be better, then he had no lien, because
the lien arises from implication, from the fact expressed or
implied that the man in furnishing the supplies or contracting a
debt, relied on the vessel as security, and if he relied on
anything else, it is another security sufficient, or supposed to
be, which, in case that turned out to be insufficient, does not
restore his lien."
In the present case, the libellant, being unwilling to sell the
coal to the owner for the use of the vessel without personal
Page 279 U. S. 572
security for the payment of the purchase price, before
furnishing the coal made contracts which specifically provided that
the owner should "pay for" the coal at the time of its delivery by
trade acceptances endorsed by three designated persons who, in
consideration for the contracts, agreed to endorse the acceptances.
Neither of the contracts provided for any lien upon the vessel, and
each, on the contrary, specifically recited that it stated the
entire contract between the parties and that there was no outside
agreement or understanding. Furthermore, upon the delivery of the
coal, the libellant accepted the trade acceptances endorsed by the
designated persons, and, when it filed the libel against the
vessel, still retained the unpaid acceptance, on which later it
brought suit against the endorsers.
Applying the principles stated in the foregoing cases, we think
that the libellant, having made specific contracts for an express
security instead of resting on the lien which the law would
otherwise give, must rely on the contracts it made for itself, and
cannot now, in a change of circumstances, resort to the lien it
would have had in the absence of the special agreements, and that,
by taking other and different security, upon which it relied, and
which it still retains, without stipulating for the retention of
the lien, it has waived the lien which it otherwise would have
had.
2. Holding that the lien was waived, it becomes unnecessary to
determine whether the deliveries of the endorsed acceptances
constituted under the contracts payments of the purchase price
which would have extinguished the lien.
The decree is
Affirmed.
[
Footnote 1]
36 Stat. 604, c. 373.
[
Footnote 2]
This is the separate designation of § 30 of the Merchant
Marine Act of 1920, 41 Stat. 988, 1000, c. 250.
[
Footnote 3]
U.S.C. Tit. 46, §§ 971, 974.